China Stock Market Today, 2 December 2025: Shanghai and Shenzhen Slip as Hong Kong’s Hang Seng Extends 2025 Rally

China’s stock markets ended Tuesday mixed, with mainland indices easing after Monday’s strong gains while Hong Kong’s Hang Seng Index managed another modest advance, stretching an already impressive 2025 rally.

By the close on 2 December 2025:

Shanghai Composite: 3,897.71, down 0.42% ^[1]
Shenzhen Component: 13,056.70, down 0.68% ^[2]
CSI 300 (blue chips): around 4,554, down 0.48% ^[3]
Hang Seng Index (Hong Kong): around 26,077.5, up 0.17% ^[4]

The move comes as investors juggle upcoming Beijing policy meetings, global bond-market jitters, and an AI- and policy-fueled two‑year rally that has already pushed Chinese benchmarks to strong year-to-date returns.

Mainland A‑shares: Mild Pullback After Monday’s Surge

Mainland stocks cooled on Tuesday after a strong start to the week.

On Monday (1 December), the rally was broad-based: the Shanghai Composite climbed 0.65%, the CSI 300 gained about 1.1%, and the ChiNext startup board rose more than 1.3%, led by non‑ferrous metals and AI-related stocks. Hong Kong’s Hang Seng advanced roughly 0.67% the same day. ^[5]

By contrast, trading on Tuesday was more cautious:

Xinhua reported that Chinese shares opened lower, with the Shanghai Composite down about 0.14% at the open, and Shenzhen also starting in the red. ^[6]
Through the morning, both the CSI 300 and Shanghai Composite were down around 0.6%, according to a Reuters report carried by IndoPremier, while the Hang Seng was barely positive. ^[7]
By the close, losses had narrowed slightly but remained notable: Shanghai −0.42%, Shenzhen −0.68% and CSI 300 −0.48%. ^[8]

Policy Meetings and Earnings Lull Sap Risk Appetite

The immediate drag on sentiment is not a single data point or shock, but a waiting game:

Investors are positioning ahead of the Central Economic Work Conference (CEWC) and the December Politburo meeting, the key events where Beijing sets its 2026 growth, fiscal and sectoral priorities. ^[9]
Analysts at Avic Securities noted that late‑year policy signalling coincides with a seasonal earnings vacuum, creating room for sector “hotspots” and speculative flows but also encouraging overall prudence, especially as year‑end liquidity tightens. ^[10]

A UBS client note cited in the same Reuters piece suggests that investors who have not adjusted positions since October remain bearish and volatility‑focused, expecting any more sustained recovery to hinge on earnings improving in Q2–Q3 2026. ^[11]

Property Stress vs. AI Strength

Beneath the index moves, the “old vs. new China” split is still obvious:

Developers: Ongoing concerns around China Vanke, which recently sought to delay repayment of a domestic bond by a year, continue to cloud the property complex. A late‑November Wall Street Journal report described how that move sparked sharp sell‑offs in developer stocks and bonds and fresh downgrades from rating agencies, underscoring that real estate remains a key risk to the broader market narrative. ^[12]
AI & new economy: AI‑linked shares that powered Monday’s gains saw some profit‑taking on Tuesday. Reuters noted onshore AI stocks down close to 1% intraday, while tech majors in Hong Kong slipped about 0.5% on average. ^[13]

Still, the bigger structural trend favours “new China”:

A Finimize analysis highlights double‑digit 2025 gains for major mainland and Hong Kong indices, driven partly by AI enthusiasm after Chinese models like DeepSeek drew global attention. ^[14]
ETFs tied to battery, chemicals and industrial themes have attracted billions of yuan in net inflows over the past three months, while tech‑heavy STAR 50 ETFs have seen sizeable outflows – suggesting investors are rotating toward policy‑backed, cash‑flow‑rich cyclicals rather than pure growth tech. ^[15]

Hong Kong: Hang Seng Grinds Higher but Gives Up Early Gains

The Hang Seng Index ended Tuesday modestly higher, extending its 2025 rebound, but the day’s trading told a story of early optimism fading into caution.

Intraday, the Hang Seng jumped as much as 0.8–0.9%, trading above 26,260 as Asian markets rallied on renewed US rate‑cut hopes. ^[16]
By the midday break, the index had cooled to a 0.1% gain at 26,061.75, with the Hang Seng Tech Index down about 0.5%, according to the South China Morning Post. ^[17]
By the close, the Hang Seng settled near 26,077.5, up roughly 0.17% on the day, according to Investing.com’s historical data. ^[18]

Bitcoin Slide and Japan Jitters Hit Risk Appetite

Several global cross‑currents capped Hong Kong’s advance:

The SCMP noted that a sharp sell‑off in bitcoin triggered unwinding of leveraged positions, denting risk appetite just as Hong Kong stocks were testing a two‑week high. ^[19]
A separate global markets piece from Reuters highlighted how expectations of a Bank of Japan rate hike fuelled a bond selloff, with Japanese yields hitting multi‑year highs, stoking fears that an unwinding of yen carry trades could ripple through global assets. ^[20]

Big Tech Mixed, AI Names Resilient

Within Hong Kong:

Alibaba and Kuaishou advanced (around 1–2%) as investors continued to reward AI‑heavy platforms, including new AI‑powered video tools.
Tencent and Li Auto slipped, weighed by weak EV sales data and broader caution toward richly valued internet names. ^[21]

This pattern mirrors a wider 2025 story: selective optimism in AI and platform leaders, but more skepticism toward segments still reliant on heavy capex or uncertain monetisation.

2025 So Far: A Slow‑Motion China Stock Comeback

Despite Tuesday’s wobble, 2025 has quietly turned into a “comeback year” for Chinese equities:

The CSI 300 is up about 16% year‑to‑date, matching the S&P 500’s performance.
Hong Kong’s Hang Seng has surged roughly 30% in 2025, putting it on track for its best annual gain since 2017. ^[22]

Valuations remain compelling:

Analyses from Finimize and ETMarkets put the Shanghai Composite and Hang Seng at roughly 12× forward earnings, compared with about 28× for the S&P 500 and around 20–21× for Japan’s Nikkei and major European benchmarks. ^[23]

Foreign investor positioning is still catching up:

Reuters reports foreign holdings of A‑shares at 3.5 trillion yuan, still below the ~3.9 trillion peak in 2021, suggesting that global portfolios are only part‑way through rebuilding exposure. ^[24]
A Reuters‑sourced slideshow in the Economic Times emphasises a gradual re‑entry by global fund managers, citing improved performance, cheaper valuations, and slightly lower fear around US–China tensions. ^[25]

Domestic investors, meanwhile, have channelled a record HK$1.38 trillion into Hong Kong equities via Stock Connect, helping fuel the Hang Seng’s surge and the revival of Hong Kong’s capital markets. ^[26]

What the Street Expects for 2026

HSBC, UBS and JPMorgan Lean Bullish

Several heavyweight institutions are now openly constructive on Chinese and Hong Kong stocks going into 2026:

HSBC Asset Management told SCMP that Hong Kong and mainland stocks are likely to “extend their gains” into 2026, supported by
- Improving earnings,
- Easing deflation pressures, and
- Continued policy support,
  even if global rate and geopolitical risks persist. ^[27]
HSBC’s Asia CIO characterises 2026 as a likely continuation of 2025’s strong run, albeit with more muted price rises, assuming China hits its growth target and the global cycle remains supportive. ^[28]
UBS strategists, cited in Reuters, expect A‑share earnings growth to accelerate from around 6% in 2025 to roughly 8% in 2026, with A‑share indices potentially reaching new highs if policy support and inflows hold. ^[29]
JPMorgan recently upgraded Chinese equities to “overweight”, arguing that after surrendering prior outperformance, the market now offers attractive upside vs. downside over the next year. ^[30]

The Cautious Camp: Deflation and Overcapacity Risks

Not everyone is convinced the next leg will be smooth:

A new Capital Economics note lays out “six non‑consensus calls” for China in 2026, warning that the country may continue grappling with overcapacity and deflation, with only partial improvement in domestic demand and growing external imbalances. ^[31]
These skeptics worry that, even with cheap valuations, earnings quality and transparency could cap multiple expansion, especially if property and local‑government debt stresses resurface.

In other words, 2026 is shaping up as a tug‑of‑war between:

Bullish narratives (earnings recovery, AI leadership, policy support, cheap valuations), and
Bearish narratives (property drag, deflation, structural overcapacity, geopolitical uncertainty).

AI, GPUs and “New China” Themes in Focus

One of the clearest consensus themes is AI and high‑end computing:

Research highlighted on AAStocks notes that in the next 6–12 months, a wave of domestic GPU and AI computing power companies is expected to list across A‑shares and H‑shares, with domestic GPU market share projected to surpass 50% and potentially approach 80% in coming years. ^[32]
HSBC Asset Management has also flagged China’s AI sector as a major opportunity, emphasising the country’s heavy investment in human capital and the large number of models coming to market, backed by real commercial demand. ^[33]

At the same time, 2025 flows show momentum in cyclical and industrial sectors:

Fund managers are overweight industrials, energy, steel, chemicals and logistics, betting on policy‑driven capacity rationalisation (“anti‑involution” policies) and a shift from “old” property‑led growth toward higher‑value industrial upgrading. ^[34]

Currency and Liquidity: Yuan Strength Helps Sentiment

The offshore yuan is ending 2025 on a stronger footing:

A Bloomberg‑sourced piece on Moneycontrol notes that the offshore yuan has appreciated nearly 4% against the dollar this year, its best performance since 2020.
The move has been aided by tighter daily PBOC fixings, renewed inflows into Chinese assets, and a weaker dollar, as markets increasingly price in US rate cuts. ^[35]

A firmer currency:

Reduces pressure on capital outflows,
Helps foreign investors feel more comfortable with unhedged exposure to A‑shares and H‑shares,
But also reflects a balancing act: authorities need to support growth without encouraging renewed speculative bubbles.

Short‑Term Technical Picture: Pullback Within a Bullish Trend

From a technical standpoint, today’s declines do not yet break the broader uptrend:

An FXEmpire market forecast notes that, even after a soft open on Tuesday, the CSI 300 remains above its 50‑day and 200‑day moving averages, signalling a still‑bullish medium‑term bias with 2025 highs still in view. ^[36]
Technical summaries for the Hang Seng show a positive momentum backdrop – with indicators like RSI in neutral‑to‑bullish territory and trend measures still signalling “buy” – but with some measures flashing overbought, consistent with the index’s near‑30% YTD climb. ^[37]

For traders, that translates into a market where dips are being watched as potential entry points, but where position sizes and risk management matter given the policy and macro event risk over the coming weeks.

Key Things for Investors to Watch After Today’s Session

For anyone following the China stock market today and into the rest of December, the main watchpoints are:

Policy Signals from Beijing
- Outcomes from the CEWC and Politburo meetings: growth target for 2026, property support measures, local‑government debt guidance, and sectoral priorities (AI, green energy, advanced manufacturing).
Macro Data Pulse
- PMIs, credit growth, export orders and property sales for November and December will indicate whether the economy is stabilising or sliding further into disinflation, as some analysts fear. ^[38]
Global Rates and FX
- The Federal Reserve’s upcoming decision and any Bank of Japan pivot could swing global liquidity conditions, with knock‑on effects on carry trades, Asian currencies and ultimately China/Hong Kong equity flows. ^[39]
Sector Earnings and New Listings
- Corporate guidance from AI, GPU, industrial and consumption names, plus the pipeline of AI‑ and chip‑related IPOs, will help determine whether earnings catch up with the optimism embedded in some valuations. ^[40]
Property and Credit Headlines
- Any updates on China Vanke and other large developers, as well as local‑government financing vehicles, remain crucial for sentiment toward banks, construction and consumer confidence. ^[41]

Bottom Line

Today, 2 December 2025, the China stock market delivered a textbook “consolidation day”:

Mainland indices slipped modestly, giving back part of Monday’s gains as investors waited for clearer policy signals and digested global volatility.
Hong Kong managed a small gain, keeping the Hang Seng’s 2025 comeback intact even as early enthusiasm faded into the close.

Under the surface, the core narrative remains:

Cheap but controversial – Chinese equities are inexpensive and increasingly in favour with global allocators, yet still shadowed by property, policy and geopolitical risks.

For news readers and investors alike, the next big clues will come from Beijing’s year‑ahead roadmap and how quickly today’s policy‑sensitive pullback turns into either another leg higher or a longer pause in China’s slow‑motion rally.

This article is for informational purposes only and is not investment advice. Consider your own financial situation and, if needed, consult a qualified adviser before making investment decisions.